Downfall

November 21, 2018
Carlos Ghosn
Carlos Ghosn

TOKYO -- The crisis at Nissan deepened Wednesday as it emerged the Japanese car giant could itself face charges over the alleged financial misconduct that led to the stunning arrest of its chairman Carlos Ghosn.

Monday’s arrest of the millionaire auto tycoon, who is credited with turning around the Nissan-Renault-Mitsubishi Motors alliance, sent shockwaves through the global car sector and corporate Japan.

The Asahi Shimbun daily said Wednesday that Tokyo prosecutors believe Nissan also has a case to answer in the under-reporting of Ghosn’s package by about five billion yen ($44.5 million) over four years. Both Nissan and authorities declined to comment on the report.

Nissan’s board will decide on Thursday whether to remove the 64-year-old tycoon as chairman, a staggering reversal of fortune for the Brazil-born businessman credited with creating the three-way alliance which together sells more cars worldwide than any other automaker.

Ghosn’s fate appears all but sealed after his hand-picked replacement as CEO, Hiroto Saikawa, launched an astonishing broadside at his mentor, saying “too much authority” had been placed in his hands and lamenting the “dark side of the Ghosn era.”

He pointedly refused to offer the deep “apology bow” that usually accompanies corporate scandals in Japan and played down the role Ghosn had personally played in reviving the firm’s fortunes.

However, in France, Renault said it was sticking with the fallen manager as chief executive although it named chief operating officer Thierry Bollore as deputy CEO, handing him the “same powers” as the “temporarily incapacitated” Ghosn.

After an emergency board meeting, Renault urged its sister company Nissan to share “evidence seemingly gathered” against Ghosn from a months-long internal investigation, saying it was unable to comment on the charges without this information.

Paris and Tokyo have been scrambling to contain the fall-out from the arrest, with the finance ministers of both countries declaring strong support for “one of the greatest symbols of Franco-Japanese industrial cooperation.”

The scandal — the latest in a string to affect Japan Inc. — wiped millions off the stock value of all three companies but Nissan bounced back marginally in opening Tokyo trade, climbing more than half a percentage point in a falling market.

Ghosn was once the darling of corporate and even popular Japan — even having a manga comic inspired by him — and has been the glue holding the auto tie-up together since 1999.

“Ghosn is likely the most successful foreign chairman in Japan,” said Kosuke Sato, a senior economist at the Japan Research Institute.

“What he did was unprecedented in Japanese corporate history.”

He had a reputation as a workaholic and won the nickname “Le Cost Cutter” in France for his slash-and-burn approach to corporate restructuring.

Under his stewardship, Nissan and Renault became deeply entwined.

Renault owns 43 percent of Nissan while in turn the Japanese firm has a 15-percent stake in Renault.

Nissan has become the alliance’s key player however, posting sales of 12 trillion yen ($106 billion) last year compared with Renault’s 59 billion euros ($67 billion).

According to the Financial Times, Ghosn was working on a merger of the two carmakers that Nissan opposed because it feared the Japanese company could be relegated to a secondary role.